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Thursday, September 15, 2011

Phil Flynn: The Worst Is Over?

Is it possible that the worst is over? Despite the separation anxiety in the Euro Zone and a rouge trade that took away UBS profits, many markets are signaling that they believe that at least for now, all the bad news is out. Or maybe that things can't get any worse. It looks like the plunging euro currency, the British Pound and the Swiss franc, is turning the corner as well as crude oil, a market by the way that we have called that the low is in for the year. Stocks seem to have found a bottom and their lows look like they might be in as well. Do we deserve all this optimism? It seems that support from German Chancellor Angela Merkel and French President Nicholas Sarkozy, is making the markets think there may be a master plan to save the Euro zone and the global economy as well.

Is the market right ? Do we deserve a bottom? Well whether we deserve it or not the indicators from the technical side seem to be in alignment. Oil is gaining confidence and we are seeing signs that products are bottoming. Besides, the market is rebounding from sharply lower expectations from the likes of many of the major agencies like OPEC, the Energy Information Agency as well as the International Energy Agency. Besides lowering demand, the other key for the direction of oil may be when Libya's oil comes back to the market. The International Energy Agency says that, "As the fighting in Libya begins to wind down and the Transitional National Council (TNC) establishes itself as the internationally recognized government, it is timely to review the many factors that will affect the pace and timing of the restart of the Libyan oil industry.

The TNC leadership, which views oil revenues as a means to rebuilding the country, and participants in world oil markets, who continue to grapple with tightness in the global supply of high quality crude, share a common interest in restoring Libya's oil production and exports. When this will happen is uncertain and depends to a significant extent on the political, military, and security situation that will determine when companies can return to oil fields to repair and/or restart production. It is also worth noting that at the time of writing, only the European Union and United Nations had lifted sanctions on Libya; U.S. sanctions remain in place"......Read the entire article.